Alleged Bribery Scheme Put Moldy Tomatoes in Processed Foods

Feb. 26, 2010— -- An alleged, long-running bribery scheme apparently resulted in tainted tomato products being added to foods processed by some of the nation's biggest companies, including Kraft Foods Inc., Frito-Lay and Nabisco, federal prosecutors say.

Giant tomato processor SK Foods has been accused of paying off buyers at large food companies to accept mold-riddled tomato products for above-market prices.

The scheme was allegedly cooked up by Frederick Scott Salyer, the former owner and CEO of SK Foods. A federal grand jury indicted Salyer, charging him of violating anti-corruption laws. Salyer has denied the charges, but five other people connected to Salyer's alleged plan have already pleaded guilty to their involvement, including four of his own former employees.

SK Foods Had Large Share of U.S. Tomato Paste Market

SK Foods went bankrupt last year but, according to the company that acquired it, it was once the second largest California tomato processor, with 14 percent of the U.S. market. The Monterey-based company processed tomatoes into paste and sold it to major food companies.

"This went to the highest levels of SK Foods and it involved multiple companies," U.S. Attorney Benjamin Wagner told ABC News. "Within SK Foods, there was a whole conspiracy to mislabel tomato product, relabeling sub-standard product as product that was acceptable."

Wagner said that Salyer's scheme went on for 10 years, with SK Foods paying somewhere between $350,000 to $400,000 in bribes to purchasing managers of its customers. The end goal, according to Wagner, was to jack up prices for the company's tomato products -- costs that may have been passed along to consumers in supermarkets.

Accused CEO Says He's Innocent

Prosecutors said Salyer, 54, had attempted to flee the country but was scheduled to be in court today in Sacramento for a bail hearing.

His attorney, Malcolm Segal, questioned the bribery allegation, saying that such a plan is implausible. "Those who are knowledgeable about the industry know that prices for tomatoes in season are generally set by the company that purchases the product. It is inconceivable to me that payments to a buyer could have affected that price," he said.

Some of the company's tomato products failed to meet quality standards established by the U.S. Food and Drug Administration, prosecutors said. The foods contained mold levels so far above guidelines that they shouldn't have been sold in the United States.